U.S. Department of Health and Human ServicesU.S. Department of Health and Human Services
This report was prepared under contract between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and LifePlans, Inc. For additional information about this subject, you can visit the DALTCP home page at http://aspe.hhs.gov/_/office_specific/daltcp.cfm or contact the ASPE Project Officer, Pamela Doty, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201. Her e-mail address is: Pamela.Doty@hhs.gov.
The demand for long-term healthcare services is rising rapidly in direct proportion to the growing population of Americans who require help with personal care and other daily functional tasks. Long-term care (LTC) expenditures now account for almost 12 percent of total personal health expenditures -- a threefold increase since 1960 -- leaving large numbers of elderly Americans vulnerable to catastrophic expenditures that can rapidly deplete their income and life savings.
At the same time, a series of government actions signal the federal government's continuing desire for individuals to accept personal responsibility for planning and paying for their long-term care needs. Limited public funding for long-term care expenses, coupled with tax incentives for individuals and companies to obtain private LTC policies, has once again heated up sales in the burgeoning private long-term care insurance market.
But does private LTC insurance represent a "good buy?" While there is a growing body of knowledge about who buys LTC policies and why, there has been no systematic study of the effectiveness of such policies. On an industry-wide basis, no one knows how benefits are being used, whether claimants feel they are getting good value for the premiums they pay, and whether the patterns of formal (paid) and informal (unpaid) service use differ for LTC insurance claimants compared to similarly disabled persons without LTC policies.
This research was designed to answer these questions. It was also designed to provide basic socio-demographic and service utilization profiles for disabled private LTC insurance policyholders, and to compare such data and findings to the experiences of non-insured disabled community-dwelling elders. Finally, we set out to discuss the implications of such findings on the service delivery system as well as on the design of private and public LTC programs and policies.
We did this by interviewing about 700 community-dwelling long-term care insurance claimants receiving benefits under their policies. We also interviewed their informal caregivers. Key findings of the study are presented below.
The Profile of Community-Dwelling Long-Term Care Insurance Claimants
Privately insured disabled policyholders are more likely to be older, widowed, and less likely to have children living nearby than are elders in the general population.
Long-term care insurance benefits are well targeted. The vast majority of recipients (79%) has significant dependencies in activities of daily living (ADLs) -- on average 3.3 dependencies -- or is cognitively impaired (32% of the sample).
Those who at the time of the interview did not meet HIPAA benefit eligibility triggers -- about 15% of the sample -- were either eligible at the time that they applied for benefits or were likely to become eligible in the very near future. This group is very frail and has few informal supports.
Use of Formal and Informal Care Services Among Privately Insured Claimants
About one-in-four claimants relies solely on formal (paid) services for their care.
Home health aides provide most of the formal care given to claimants. Two-in-three claimants receive care from this type of service provider.
On average, claimants receive 59 hours of care a week. Insurance pays for an average of 36 hours per week, which is equal to about 60% of the total care received.
Formal caregivers split their time fairly evenly between ADL and instrumental activities of daily living (IADLs) whereas informal caregivers are more likely to be providing greater amounts of IADL and less ADL assistance.
Formal service providers spent 44 hours in the homes of claimants of which 36 hours were spent on ADL and IADL assistance. About 18% of the time was spent on non-ADL/IADL activities.
Benefits paid under Insurance Contracts and Insurance Policy Designs
For more than 70% of claimants, insurance pays all of the costs of care.
The average monthly insurance benefit paid to claimants is $1,527. This compares to an average public insurance benefit (i.e. Medicaid waiver) for home care of $450.
As of the interview date, the average claimant had been in claim for about 13 months and had received $18,000 in benefits. This amount represents less than 20% of total available insurance benefits.
The typical coverage for home care reimburses up to $80 in daily costs for a period of about four years.
One-third of claimants has some form of inflation protection.
Claimant Satisfaction with Insurance Policy and Insurance Company
The vast majority of claimants (86%) is satisfied with their policy and most (75%) had no difficulty understanding what their policy covered. Most (70%) found it easy to file a claim. About 19% felt that the company could have provided additional customer support and more information about how to use benefits.
Claimants with a disability policy design were the most likely to be very satisfied with their insurance policy.
About 90% of all individuals filing claims had no disagreements with their insurance companies or had a disagreement that was resolved satisfactorily.
While most claimants felt they had purchased enough home care coverage (75%), the rest (25%) wished they had purchased more.
Impact of Private Long-Term Care Insurance on Claimants and Informal Caregivers
About 60% of claimants indicated that without their policy they would not be able to afford their current level of services and would have to consume fewer hours of paid care. Many also indicated that without their policy benefits, they would have to rely more on informal supports.
About half of all claimants and informal caregivers indicated that without private insurance, they would have to seek institutional alternatives -- nursing home care or assisted living facilities.
The presence of insurance benefits has not significantly reduced the level of informal care received by claimants. Roughly two-in-three informal caregivers have not reduced the level of care that they provide with half maintaining the same level of care. This finding suggests that for most informal caregivers, insurance financed formal care is not a perfect substitute for informal care.
Where formal care does substitute for informal care, the substitution is selective; that is, the formal care financed by insurance benefits may substitute for the care provided by adult children but not necessarily for the care provided by a spouse.
About two in three informal caregivers indicate that the presence of private insurance benefits has reduced their level of stress.
Levels of Met and Unmet Need
The majority of claimants do not report unmet (82%) or undermet (77%) needs. Yet for those who do, the principle contributing factors are service availability, scheduling, continuity and coordination of caregivers, claimant preference and the quality of caregivers.
While long-term care insurance is succeeding in bringing formal caregivers into the homes of disabled elders, in some cases the services of these providers are either not being utilized by claimants or are not being supplied to the claimant.
Claimants with multiple caregivers report greater levels of undermet need. This suggests that clearly delineated lines of responsibility may be particularly important in assuring that needs are adequately met.
Comparing Privately Insured and Non-Privately Insured Community-Dwelling Disabled Elders1
Compared to those without private insurance, disabled elders with private insurance are more likely to live alone and less likely to have children living nearby. They are also four times more likely to have some college education, eight times more likely to have incomes greater than $30,000 and are overwhelmingly white.
The prevalence of physical impairments (i.e. ADL limitations) is much greater among the privately insured than among the non-privately insured; on the other hand, cognitive impairment is much more prevalent among non-insured disabled elders.
About 90% of the non-privately insured rely on some level of informal care compared with 77% of the privately insured.
The privately insured are roughly five times more likely to rely exclusively on formal care than are those without private insurance. This finding supports the hypothesis that private insurance may be used to compensate for a lack of available informal support.
The majority (70%) of individuals with private LTC insurance primarily uses unskilled services such as home health aides and homemaker services, whereas among the non-insured disabled, nursing care remains the most prevalent Medicare funded home care service.
The privately insured receive 14 hours more per week of assistance than do the non-privately insured. Much of this is attributable to the receipt of formal services.
Very few of the privately insured use Medicare as a payment source for home care services. By contrast, roughly 30% of non-privately insured disabled elders use Medicare as a payment source.
Clearly, LTC insurance benefits are well targeted; they serve those truly dependent on on-going care. The vast majority of claimants is satisfied with their policies, understand their coverage and find it easy to file claims. Because of their LTC benefits, substantial numbers of disabled elderly individuals can remain at home instead of being forced to seek institutional care. Moreover, the availability of LTC benefits reduces stress among informal caregivers and decreases usage of Medicare to fund home health care expenses. Finally, for insured individuals, formal care may substitute for some, but not most informal care, and the two systems appear to be working together to better meet the needs of claimants. Expansion in the private market is likely to lead to reductions in public expenditures on long-term care and the insurance is likely to continue to help disabled individuals remain in their homes at the same time as it maintains and enhances the resiliency of informal support networks.
To be included in the comparison sample, the privately insured and non-privately insured had to meet a minimum disability threshold of at least two of six ADL limitations or be cognitively impaired.
| The Full Report is also available from the DALTCP website (http://aspe.hhs.gov/_/office_specific/daltcp.cfm) or directly at http://aspe.hhs.gov/daltcp/reports/ifpattrn.htm. |